The perennial Obama snub story is back and it includes all the elements of farce that we have come to love. Did they really think the fifth call would make the difference? Was there anywhere for them to sit down in the kitchen? Or was the pow-wow too short to bother?

It is understandably being seen in the context of the Lockerbie furore and a prime minister who looks like his days are numbered. To be fair to Gordon Brown, most of the economic policymaking is probably settled, or can be finalised at the G20. And Obama isn’t seeing any European leaders. But there is one very good reason for a serious meeting to take place: Afghanistan.

There has arguably been no more important a time for Britain’s views on the future of the Afghan conflict to be heard in Washington. The president is going through a root and branch strategy review, which has arguably left Britain’s mission in limbo. And yet, even at this critical time, the president is unwilling to set aside an hour for the British prime minister — his main partner in war — when they are in the same city together.

I was struck by Gordon Brown’s insistence today that: “Three-quarters of the terrorist plots that hit Britain derive from the mountain areas of Pakistan and Afghanistan and it is to make Britain safe and the rest of the world safe that we must make sure we honour our commitment to maintain a stable Afghanistan.”

I also noticed Labour MP Caroline Flint making the same point on morning TV.

But - I’m not a Foreign Office expert - I thought I’d read somewhere else that three-quarters of terrorist plots in Britain came from Pakistan per se.

Yes, here it is, back in the spring. From Mr Brown himself: “Three quarters of serious plots investigated in the UK were connected to Pakistan.”

In other words, they are not necessarily anywhere near where we are fighting. (Karachi, where I grew up, is 1,104 km from Peshawar in the mountains).

This seems seriously disingeneous.

UPDATE

The duty press officer at the Foreign Office wasn’t able to answer this one yesterday. Nor did Gordon Brown’s spokesman have the exact details of the stats this morning beyond saying that the UK faced a major threat from people on the Afghanistan-Pakistan border.

“I don’t think we can necessarily pinpoint exactly where each of these plots orginates…the point that we set out in April is that we need to tackle security in that border area.”

Um, where does the statistic come from then?

I’m told by one reporter who visited Pakistan on the PM’s jet earlier this year that the figure was then said to be closer to 60 per cent than 75 per cent, although I have no proof of this.

(By the way, worth pointing out that it only covers recent years - and so excludes Northern Ireland incidents.)

Now I stop to think about it, maybe most of the people on the list are UK citizens who happen to have relatives in Pakistan? If so, what relevance do they have to our battle in the “mountainous areas”? Do we actually know?

The Tories are still piling pressure on Gordon Brown to execute a “proper U-turn” on the Iraq war inquiry.

But if David Cameron is so keen to make the proceedings public, why doesn’t he commit to it himself? His word may have as much force as Brown’s.

Just imagine if Cameron said: “the next Tory government will publish all testimony given to the Chilcot inquiry.”

Given the expectations of a Tory election victory, from that point on the inquiry would effectively be public. Sure, the evidence sessions would be held in a closed room, at least until the election. But every witness would know they were speaking to the country.

Cameron could also make clear that the remit will change: the inquiry would be given the task of apportioning blame where necessary.

To ensure the committee was not thrown by the change, he could say there would be “no arbitrary time limit”. They could take as long as they needed.

Finally, Cameron could add that a Tory government would ignore concerns in Washington and grant the inquiry full access to all US documents in the UK archives.

These were all points Cameron made in the Commons debate on the inquiry. It seems simple enough: if Cameron thinks the inquiry should be conducted in this manner, why not promise to do it?

A big moment: Downing Street have just released the seating plan for the G20 dinner. The protocol officials seem to have done a decent job because it is hard to pick the best place to sit. We’ve decided that Felipe Calderon of Mexico has a pretty good spot, with Russia and Brazil to his left and right, and China and France opposite (well, if Sarko turns up). We’re wondering what Gordon Brown will have to say to Susilo Bambang Yudhoyono.

Some other important details to report. Downing Street have confirmed that there will be a veggie option (possibly for the Indian premier?) There is no exchange of gifts as part of the bilateral but the heads of delegations will tomorrow receive a “selection of produce that highlights British talent”. The trip was worth it then.

Ever wondered what the IMF would demand from Britain? Simon Johnson, the former IMF chief economist, offers a good guide to an organisation that “specializes in telling its clients what they don’t want to hear”. His piece in the Atlantic runs through a typical IMF solution for the US, but most of the points apply to the UK too. Here’s the nub of his argument, which would be painful reading for Gordon Brown and “oligarchs” in the City.

Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support.

Big banks, it seems, have only gained political strength since the crisis began. And this is not surprising. With the financial system so fragile, the damage that a major bank failure could cause—Lehman was small relative to Citigroup or Bank of America—is much greater than it would be during ordinary times. The banks have been exploiting this fear as they wring favorable deals out of Washington….

The challenges the United States faces are familiar territory to the people at the IMF. If you hid the name of the country and just showed them the numbers, there is no doubt what old IMF hands would say: nationalize troubled banks and break them up as necessary.

He goes on to recommend that the big banks that helped lead the economy to ruin are broken up.

The second problem the U.S. faces—the power of the oligarchy—is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.

Oversize institutions disproportionately influence public policy; the major banks we have today draw much of their power from being too big to fail. Nationalization and re-privatization would not change that; while the replacement of the bank executives who got us into this crisis would be just and sensible, ultimately, the swapping-out of one set of powerful managers for another would change only the names of the oligarchs.

If you want to see a critical response to the article, Dani Rodrik makes some convincing points.

The Foreign Office finances are dire. Its small budget has been hit hard by the collapse in sterling. The consequences are slowly beginning to emerge. As we reported today, Britain is set to withdraw the vast majority of the police seconded to EU reconstruction missions around the world. That will put the UK’s contribution to civilian operations in hotspots like Afghanistan, Georgia, Palestine on a par with Slovakia’s. So much for being a big player in Europe.

These kind of reconstruction and conflict prevention missions were a top UK priority. Gordon Brown even pledged last year to muster a 1,000 strong standing force of civilian volunteers. That now seems like a pipedream: the UK can no longer even afford its existing deployment of 100 police.

How did it come to this? One problem is how the FCO has managed its currency exposure.

Last year the Treasury removed the protection it gave the department against falls in the pound. (Very generous.) As a result, the FCO mandarins decided to hedge, telling MPs that “the ‘do nothing’ option is itself speculative and potentially high risk”.

But, for whatever reason, the FCO failed to cover itself beyond October 2009. So by the autumn, if the pound is still in the doldrums, the department will see its purchasing power slashed. You have to ask why it did not protect itself for longer — its budget, after all, is settled over a three year period. Other departments are facing pressure from the Treasury to cut costs and make savings. The FCO, somehow, seems to have put a squeeze on itself.

Was this a self-inflicted blow? I’m not sure. The Treasury may have stopped the FCO from hedging for more than a year. If this is true, the Treasury should cover the costs. But if this is a matter of the FCO being too timid, the mandarins will have some explaining to do. If the pound fails to recover by October, embassies around the world will see their expected budgets cut by up to a quarter.

The FCO board is now in a real pickle. Does it hedge to protect against the pound falling further in 2009/10? Or does it bet against the Euro and the Dollar by going into next year unprotected?

Gordon Brown used to boast that Britain was “better prepared” than other countries to ride out the economic storm. Britain’s diplomats now have to decide whether to bet their budget on whether the prime minister was right.

If there’s one thing less popular with C1/C2 voters than an open borders immigration policy it would be the idea of taking in foreign terror suspects. But what if it helps the UK win favour with the new American president?

It remains to be seen whether Gordon Brown will acquiesce to the US call to provide homes for some of the 50 or 60 detainees of Guantanamo Bay who are not considered a threat but cannot safely return to their native countries.

Barack Obama has already made it clear he wants to shut down the Cuban prison camp, which has been a stain on US reputation. But the US State Department’s attempt to get other countries to take the detainees is not going well. The Netherlands has said no. Sweden, Spain and Poland have warned of domestic legal issues if they do so. The Australians say any entrants must pass rigorous tests. Only Germany and Portugal have said yes so far.

What about the UK? Here is the article in The Times which provoked a big debate today by suggesting that Britain may be one of the few countries to say yes.

The Foreign Office is trying to douse the story with cold water, suggesting that it has already received 9 British inmates and four former UK residents. It is also in talks to take another two. The department seems to be saying that it has already done its fair share - and now it’s time for other countries to pull their weight.

But I was left with a rather different impression from one government aide today. This person said we shouldn’t believe the story because the US had not yet asked for help with the detainees - and it was impossible to prejudge what the British approach would be to any forthcoming demand. That is not the same as denying that the UK is preparing the ground for this to happen.  

The US National Intelligence Council has a distinctly unflattering forecast of Europe’s future in its Global Trends 2025 report.

The finest US intelligence analysts conclude that, according to current trends, the European Union is in danger of being left behind as “a hobbled giant distracted by internal bickering and competing national agendas”. The title of the section says it all: “Europe: Losing Clout in 2025″. Continue reading "Europe: a hobbled giant"